What can be the most threatening challenge to the federal system in Nepal?why?
Answers
Answer:
While the constitution has assigned a larger functional, semijudicial, and fiscal authority to elected local governments, it has also created greater responsibilities for effective service delivery and accountability toward citizens.
Statement of Issue
In Nepal, the new constitution has assigned expenditure responsibilities and revenue sources to all three tiers of the government. While most of the key revenue sources remain with the central government, expenditure responsibilities of the subnational (province and local) governments are relatively larger creating a large vertical imbalance.
There is also a large horizontal imbalance among the subnational jurisdictions due to heterogeneity of areas, population sizes, economic bases and availability of natural resources.
Given the limited revenue bases assigned to subnational governments (SNGs), and their weak revenue generation and administration capacity, the resultant gaps at the SNGs will have to be met primarily through fiscal transfers by the central government. There is an apprehension that high fiscal dependence on the central government will adversely affect the quality of devolution and autonomy of SNGs.
To reduce the dependency and increase autonomy, SNGs will need to ensure that assigned tax and nontax revenue sources are exploited to their full potential, and new tax sources are explored. Further, assignment of taxes and revenue sharing arrangements will also need to be reviewed.
The revenue generated by local governments in the past accounted for less than 2% of the total revenue. This is unlikely to change drastically in the federal setup because revenues assigned to local governments under the Local Self Governance Act (LSGA, pre-2015 constitution) are largely the same as the ones provided under the new constitution.
Answer:
Poverty, regional imbalance and unemployment remain Nepal's major problems. The idea of federal structure emerged as a political agenda against unitary system after the success of people's movement in 2006. Like in other federal countries, provinces demand the additional expenditure as they face new challenges.